Pleb Miner In the Wild (Zack Bomsta)

Bitcoin is close to becoming worthless.

Let's go!

Now, what's the Bitcoin? Bitcoin's like rat poison. Yeah. Oh. The greatest scam in history. Let's get it. Bitcoin will go to fucking zero.

Yeah.

Yeah.

All right, you ungovernable misfits. I'm your host, Max. Everybody knows that Bitcoin is useless, worthless, and doomed to fail. But what if everyone's wrong? What if it's the system that is doomed to fail?

Join me as I speak to some of the brightest people in the space, and deliver to the deepest, darkest depths of the Bitcoin rabbit hole.

Welcome back, everyone. Today's episode is a short one. But it's the full version of the pleb minor in the wild from our pleb minor monthly episode two. It was so good I wanted to share it with you guys, and I will be having Zach back on the show for a full pod.

Probably in a month or two, we'll see how things progress and yeah, really looking forward to that one. I hope you enjoy this. If you have any questions, you can go back to the pleb minor monthly episode two.

That's two episodes ago. You can reach us on fountain, ask any questions on there, or email, or Twitter. Look forward to hearing from you.

Today, we have the privilege of observing the elusive and often misunderstood pleb minor. If you listen closely, you will hear the unmistakable sound of its mating call. To others, the sound is offensive.

But to the pleb, it's a rousing beyond measure. These creatures survive by scouring the earth for energy and scavenging hashrate from others whose over exuberance costs them dearly. The pleb minor may not be at the top of the food chain, but make no mistake.

Its ingenuity, scrappy nature, and unquenchable first for sats, make it a force to be reckoned with. Zach Baumster, thank you for being our pleb minor in the wild. Yeah, thanks a lot. Happy to be here.

I'm excited to talk to you. I'm excited for everybody to find out what you're working on. First things first, your professional background. Let's talk briefly about what your technical expertise is and how you came to develop your company called Owlette.

Cool, yeah. So I went to school for electrical engineering with an emphasis on hardware and embedded systems. Even before I went to school, I was quite involved in circuit design. And so by the time I got into school, I was involved in a couple of different startups in the hardware space.

One was doing-- I had just actually won an SBIR grant for working on drone technology for the military. And the other one was a SBIR safety technology that actually just recently went on Shark Tank.

B.S., I had a lot of opportunity early on in my schooling career to really start building some startups and kind of getting that business exposure and really good opportunities. And so while I was going to school, I actually had my first child.

She was three months old. And I was up on campus one day. It was actually the night before my three-month-old was really sick and congested up all night coughing. And my wife and I were worried sick all night, didn't get a wink of sleep.

And the next day, I'm up on campus. And I bump into a friend of mine who I hadn't seen in a while. And he's in the electronics lab trying to clumsily put some circuits together. And I'm like, hey, Kurt, what are you doing in here?

And he explained to me that he was developing a smart sock to put on babies to help with when they're sick. And as he explained this to me, I got goosebumps. And I was just like, well, let me tell you about what just happened to me last night.

My experience with my three-month-old that just happened, he started explaining more and more of this startup idea to me what the startup he was working on later became outlet. And he told me this story.

And I just thought, oh, man, I've got to get involved with this. So I actually pulled out of these other startups that I was involved in and started working on this company called outlet.

And what that company did is made a smart sock that would go on a baby's foot and monitor their heart rate and oxygen levels using hospital grade technology called pulse oximetry. It's that little red light that they put on your finger when you go to the hospital.

And we took this amazing technology that's really been around since the late '80s. You see it in pretty much every hospital you go to. It's been around since the '80s. But that technology had kind of frozen in the hospital.

And we saw an opportunity to take this really incredible technology, shrink it down, and redesign it so that it could be portable, battery powered, and really so that it could be appropriate for monitoring in the nursery.

Ended up launching the product back in 2015, launched this product. And I've been selling it ever since since then. We've sold about a million and a half devices. And yeah, it's been a really awesome ride.

I've been really grateful for my opportunity to be involved in it. Excellent. An American success story. Yeah, we went public back in July of 2021. And I guess some people will gauge success on whether or not you go public or how you're acquired.

I think for us, kind of the guiding success metric has always been, how many lives did we influence? Yes. We were always looking at, how many babies have we tracked? And how many parents have we helped to give better care to their infants?

And it got to the point, you know, near the end where we were getting multiple stories a day of how parents would get a notification to go check on. We had reached enough customers by then, or we were monitoring on enough babies that on a daily basis, we were getting multiple stories of how the outlet notified

the parent to go check on their baby. And they'd go in and their baby, you know, wasn't breathing or had a really high heart rate and turns out they had a condition known as SVT that you really can't detect unless you're monitoring their heart rate.

So, you know, that's what we saw as our biggest success. That's awesome. And it all just starts from your, you're a young parent and your daughter's up coughing all night. And then that opportunity falls into your lab.

So you go public with outlet, you sell outlet, you're able to take some time off because of the success of outlet. Is that when you kind of fell down the Bitcoin rabbit hole? How exactly did you come into this Bitcoin world from being a hardware developer?

- Yeah, so, you know, after nine long years of startup life, I had a mentor of once tell me, you know, if you knew what it took when you started, you would never have started. And he also taught me that startup life is about four years to one.

And so, after nine years of working on this product, I-- - You're a very old man at that point. - It felt like it anyway. And so I had decided to go on sabbatical and that did afford me the opportunity to really dive down the Bitcoin rabbit hole.

But maybe even before that, my first exposure to Bitcoin was in 2015, I was actually on a red-eye flight from Salt Lake City to New York to attend outlet second or third official board meeting.

And I'd been on this red-eye flight with my two co-founders. And we had just touched down in New York. It was like six a.m. We touched down in New York, you know, I'm bleary-eyed, tired. And my co-founder Jordan comes up to me.

We weren't sitting next to each other on the plane. He comes up to me in the airport, just all, you know, happy and like excited to share with me. And he tells me, dude, I just sat next to this guy on the plane and talked to him the entire time about this new thing called Bitcoin.

Have you ever heard of it? And you know, so I was the, I was a chief technology engineer at outlet, or sorry, chief technology officer at outlet. And so I think just naturally all things techy tend to be put on my radar as the CEO.

And so I think he was just like, well, I've got to talk to our CTO about this. He comes to me and he just starts talking about Bitcoin. And at that time in 2015, you know, like most people, I wish I would have paid more attention.

- Oh, yeah. - But I remember having two distinct thoughts. One was, you know, I was, I was working 100 hours a week regularly at this job. And there was just so much to do. And I remember him coming and telling me this.

And my first thought was Jordan, I don't have time for this. Like, I've got some work to do. And then, but I, but I humor him and I listened. Cause we, you know, what else was I going to do?

We were stuck in an Uber. And so the next, my next thought was, wait a minute, you're telling me that all of the transactions are on a public ledger. And I started pushing back on that. And he wasn't comfortable with the details, but I started pushing back.

And, and my thought was this is some government co-opted currency that is just trying to like get my privacy into being, you know, they're just trying to pass it as this new, cool technology.

Good posture. And so I, I wrote it off. Well, that was my, that was my first take. And I wrote it off. And then, you know, fast forwarding through the year, still, still being involved out from 2015 through 2021.

The next six years, I, you know, I dabbled, I dabbled in crypto a little bit, you know, just like doing some day trading, trying to play the casinos type of thing. Sure. And there, and I was turned on more to the idea of Bitcoin, but I didn't really understand it.

And it wasn't until my sabbatical that I was really afforded the opportunity to go spend the time needed to, to do the research. And, you know, it started with the, the Breedlove Sailor's podcast series.

That's really what, that's really what sucked me down in. And, you know, from, from there, I guess the rest is history as they say and just, that just everything that I learned just seemed, it just kept drawing me in.

Every new aspect of it just kept drawing me in. You're developing a product for babies. So I'm sure the regulatory hurdles that you guys had to overcome were monumental. - How did that kind of frame your mind in how you approached Bitcoin?

'Cause now you're like, you're fighting the man essentially. Did it give you kind of a harder edge? - Absolutely. And actually, I think if I can spend a little bit of time, extra time on this point, 'cause I think it's saline, I think it really is what drove me to dive into what I'm doing now with home mining.

So with Owlette, we technically are not an FDA-cleared device yet. In fact, unfortunately in late 2021, we got a public warning letter from the FDA notifying us that we had to stop selling our product because we weren't FDA certified.

And that really hit Owlette hard. It completely stopped our sales for about four months. We had to significantly change the product. Unfortunately, we had to make changes that, luckily the product is still as effective for monitoring babies' health and wellness as it was before.

Unfortunately, the user experience has been significantly watered down. But the reason I share this, so we'd been working with the FDA for six years up to that point. At one point, we had the director of digital health tell us on a phone call that our device was not accepted as an FDA-cleared device or had been rejected

because he did not view our device as needing to be a medically-cleared device. So I said, you know, I rejected your application because in my opinion, this isn't a medical device. It doesn't need to be.

We operated on that for six years. Every six months or so, the FDA would come and say, "Hey, we've got some questions. We have some concerns. We need you to address the concerns. We need to address their concerns.

They'd go away." And that was that. And then they'd come back six months later with a different concern. That went on for six years. And then out of nowhere, we got blindsided by the FDA.

We had been working with them in communication with them and they slapped this public warning letter on us out of nowhere, which talking with experts and consultants in this industry, that was a surprise to them as well.

They said, you know, usually the FDA only uses these public warning letters for companies that are avoiding them or that are just flat out ignoring them. And you guys have been working with them closely over these six years, so.

They found out you were a Bitcoiner. - Maybe that's it. So why do I share all that? You know, the lesson learned there was, when you get in the crosshairs of government agency, there's, if they decide to act, you don't have a whole lot of recourse.

And that was a really hard lesson. You know, it completely upended our, it was a $1.4 billion business at the time. It completely upended it. It cost us tens of millions of dollars to rectify the situation.

And we had no recourse. We had consultants, we had legal counsel. We had all these people identifying and calling foul and identifying all these injustices of the FDA, saying, this isn't right, but we had no recourse.

And so as I'm on sabbatical now, I'm thinking about that experience and I'm looking to Bitcoin. And somewhere along the journey, you know, I'd gotten interested in mining at first. And then I remember hearing Michael say, someone asked a question in a podcast with Michael Saylor like, hey, you know, what do you think about mining?

And he said, well mining, probably, unless you have some competitive advantage, you know, and tens of millions of dollars of capital, it's probably not for you. And so I just kind of took that at face value and thought, okay, yeah, probably he's got a good point.

I'm not going to worry about home mining anymore. And then I got thinking about my experience with the FDA. And I've been watching these updates from, I've just been watching the response, right?

Whether it be the environmental, the attack vector or the attacks coming from the environmental attack vector on, oh, Bitcoin's bad for the environment. Or whether it's these governmental reports coming out, you know, kind of casting shade on Bitcoin.

And it hit me that, you know, this Bitcoin mining isn't a whole lot different than Owlette was in the sense that it is vulnerable to government agencies coming in and shutting it down, especially if it's centralized.

You know, when Owlette was shut down, the FDA didn't go out to Owlette's 1 million customers and say, hey, you can't be using that product, you can't be, they went to the central location, Owlette itself.

He said, you can no longer sell this product. And so it hit me that, you know, if I hope this never happens, but if someday the political, there's political headwinds for Bitcoin and it results in the government coming and saying, we're gonna shut down Bitcoin because it's bad for the environment.

- Mm-hmm. - If you have-- - Or an individual state. You know, you look after the Chinese mining ban and look what Texas is now for mining, something can happen at the flip of a switch, Soros funded AGs in Texas could dip the scales down there and what happens to it.

It is centralized here in the United States now. - Right, and you know, the big centralized mining operations, they're performing an important function, they're buying us time, they're securing the network, but I think that we would be remiss as Bitcoiners who use and rely on the Bitcoin network

to just say, it's okay, the big central miners have it because those big central miners have a lot more vulnerability to a public attack vector, or I should say a political attack vector than individuals do.

And that's not to say that individuals couldn't, you know, don't have that same attack vector, but their exposure to that is much lower because it's just cost too much political capital. It's just too politically expensive to try and go and regulate every single individual.

So my thought was, okay, if this is coming, if this has even the slightest chance of turning out in a similar way that outlet did, how do you go about stopping that before it, you're at that point?

And the thought was well, decentralization, right? We've got to decentralize enough, we've got to get enough miners and enough homes that the day the government comes and says, all right, it's now illegal to have these big centralized mining operations for XYZ reasons.

We need to have enough hash power online in homes distributed throughout the country that when those centralized miners are forced to shut down it, and hopefully that day never comes, but if it does, if they're forced to shut down, the network still has, you know, the network's still strong and healthy.

- Don't worry, Zach, the pleb miners will carry the load. - Yes, that's what we're going for here, right? - So, you know, a lot of the pleb miners that we know everybody seems to have their little specialty.

You know, some guys are good at HVAC, some guys are good at IT, some guys are good at the electrical stuff. You have a unique background, and you're now applying it to the pleb miner community.

Can you tell me a little bit about what you're working on? - Yeah, I'd love to. So, yeah, that unique background, that's kind of my jam, what I love doing is circuit design. And as I've tried to grapple with this problem of how do we get more miners and more homes?

You know, I loved some of the progress I've seen. I love what Kaboom Racks is doing with their S9 space heaters and just, I love the pleb miner movement of getting these S9s out there as space heaters.

But as I've grappled with this problem, I'm not fully satisfied with the S9 being the solution, right? It's several generations removed from the bleeding edge, new gen A6. But unfortunately, it's the last, how do I say this?

It's the last miner that is easily adopted by the masses because it's the last miner that can mine on 120 volts. And so as I'm looking at this, I'm thinking, okay, how can I apply my talents here to try to crack open and make new generational miners available for the masses in the home?

And the first step is you've gotta allow the miner to hash from 120 volts. And the reason for that, you know, speaking to a U.S. audience, the reason for that is most homes are only have 120 volts and one 220 volt plug at the, or maybe two, one at the dryer and one at the electric stove, right?

And so if we really wanna get the masses, my main focus here is how do we get, you know, I love the passion and the pleb miner community. How do we spread that? How do we spread the results of that passion being that we have home miners?

How do we spread that to the masses that don't have the same level of passion that pleb miners have? How do you get just your regular pre-coiner to put a Bitcoin miner in their home? I think it's really hard to get them to do that if it entails calling an electrician and spending several hundred dollars

to get a 220 volt plug put in or doing it themselves or, right, there's just enough hurdle or barrier to entry to put new generation asics in your home that I just don't see new generation asics being widespread enough.

And so the idea here is, yeah, okay, how can we build out equipment that allows these miners, these new generation hashing boards to essentially be mass distributed throughout the general population to Bitcoiners and pre-coiners alike?

And so ultimately I see the ultimate end goal of the work that I'm doing is to have, you know, take a new generation asic like the S19 and parse it out. Right now it comes as one nice single unit consuming 3,000 watts.

Is there a way that you can economically parse that out into three different units, each consuming 1,000 watts and now each powered from, you know, a standard 120 volt outlet? Mm-hmm. Well, if you're gonna do that, there's some supporting equipment that you're gonna need to be able to do that,

especially if you wanna do it cost effectively. You know, one solution would be well, just buy a 120 volt to 240 volt transformer and plug that thing in and now you can run the miner from 240 volts from a 120 volt outlet except that you start to run into other problems and it's not cost effective.

So the end goal here is to have one S19 parsed out into three standalone space heaters or, you know, you can go with the different configurations the first one that I'm working on is a space heater and then building out the supporting circuitry you need to be able to do that.

So what you've done in order to do this was develop three different circuit boards that all have different personalities and functionalities to them. Can you describe the circuit boards for us?

Yeah, you bet. So the circuit boards, actually, I've chosen to use Norse mythology to name these boards and so the first board is known as the Loki board, Loki being the god of mischief in Norse mythology and the idea here is that the Loki board can spoof the APW12 or it can spoof the power supply needed for an S19.

So the control board of the S19 actually doesn't allow you to hash from just any old power supply. It wants to verify that you're using a bit main power supply and so what the Loki board does is it tricks the control board into thinking that it's hashing from a bit main power supply and once it's done its job and tricked it

into thinking it's hashing from that, you can power the control board and the hashboards from any power supply that's putting out between 12 and 15 volts DC. Now obviously you'll have to monitor the current consumption, the power consumption of that power supply.

You can't plug in a power supply that needs three or that's pulling 3,000 watts from 120 volts standard outlet but it would allow it would give you options now to reconfigure the hashboards.

The second board that I'm working on is called the Njord board. Njord being the god of wind and sea. I knew that, everybody knows that. Yeah, I know right. So the Njord board actually allows you to control or modulate an AC fan or really any AC load in place of the stock fans that come on the minor.

You can substitute one of the quieter, more efficient fans for the loud, whiny ones. That's right, yep, yep. So there's a big movement to use these AC inline duct fans. They're much quieter, better fans all around.

So the idea is you unplug the stock fans, you plug the north board in and then you plug your fan into that north board and it will now use the native algorithm of the control board for the temperature PID controller for controlling the temperature of the hashboards.

It will use that native algorithm to modulate your AC fan or as some people pointed out, you could use it for running a pump if you're doing a heat exchanger type cooling solution. Oh, and one other thing to note on the Njord board is it will simultaneously spoof the stock fans.

So you don't have to worry about the control board freaking out because it's not getting the fan signal back. Obviously that doesn't matter for brains if you're operating on a immersion motor or whatnot, but if you want to be running an AC fan and you want to use that control, you've got the Njord board is spoofing

and making the control board think that everything's good and that the fans running the way it should be. - Given your background and experience, especially developing an electronic device for babies, you know a lot about safety.

How did you apply that to the control boards? - Yeah, so that's where the third board comes in and that third board is the Heimdall board. That's the Heimdall being kind of a watch God. The Heimdall will essentially monitor temperature.

It's a second point of temperature monitoring. It will have the ability to monitor the temperature being reported from the hashboards as well as an external probe if the user chooses to install that, as well as some additional features monitoring, like monitoring how much temperature, or sorry, how much current the miner's drying,

things like that. It'll monitor all these different inputs and determine if there seems to be any safety concerns or safety issues with the miner. And if so, it will have the ability to cut power to everything.

It'll power down the power supply. It'll power down the miner. It'll power down everything downstream of the Heimdall board and therefore mitigate any thermal runaway issues or other potential safety issues that could happen.

As you mentioned, kind of coming from the baby safety space, as I mentioned earlier, we had close to one and a half million units out in the field. And regardless of how safe you try to make things, with a one and a half million units you start to see, just things happen that you wouldn't expect to happen

and you start to really value an emphasis on safe design. And so with these miners now, most miners, you just plug in and you don't really think much about the safety. But if the end goal here is to get eventually millions of miners in homes of pre-coiners and just mass market, you're going to get to quantities where you've got to start

thinking about, well, what could happen? What could go wrong? And really, really emphasize that safety from the beginning. And so the idea with the Heimdall board is to provide an added redundant layer of safety on top of what the miner already has, just to make it even safer for every home.

I think that's one of the more exciting aspects of what you're doing, is here you're taking these machines that are designed to be in a data center that have their own levels of safety inside the data center and making it possible to put these things into people's homes.

So I assume that's your end goal, is to help us further decentralized mining to bring a miner being in the home beyond a pleb miner who usually has all these skills and interests to do these things and provide a product where somebody can hash in their home.

They can heat their home. And they can actually do pretty well to contribute hash rate and get some sats in return. So tell us a little bit about what your end goal is for these products.

Yeah, I think actually there's two different end goals. One is to enable other like-minded developers and builders that want to just go build their own home solutions. I should say, they want to go build their own new gen A6 solutions.

The goal is to make these circuit boards available so that anyone with just a little bit of technical skill that's comfortable opening up a miner can buy one of these boards and then they can create their own enclosure, they can create their own solution, whatever works for their home.

But the boards will be there to help them hash from 120 volts or control AC loads or just if they want that added safety measure. So the first goal is let's get these boards out and make it available and see what the plug mining community does with these boards.

And then the second kind of bigger goal here is to incorporate all these into home miners that can then eventually be placed in pre-corner's homes, obviously needing to build a little business model around how to incentivize because we've got some pretty neat heating solutions or Bitcoin heater solutions out there on the market

like heat bit or hands-free Bitcoin. Awesome to see what they've done. But I think in order to get mass market adoption for pre-corner's, the price has got to come down and there's got to be a more creative business model around how to get what's going to incentivize owners, pre-coiners that maybe don't speak Bitcoin

or don't have a little fair with Bitcoin, what's going to motivate them to put this in their home. So but the end goal is to be able to combine all this technology together, create a final unit that can then go and be placed in pre-corner's homes coupled out with a business model that incentivizes them, speaking to their currency

or what they value and maybe Trojan horsing them into. The currency that will not be named. Right. And then hopefully Trojan horsing them into Bitcoin at some point. But if not, that's all right, they're still helping the Bitcoin network by hashing in their home.

And I'd like to see a bunch of FDA regulators go into everybody's homes and try to rip out their space heater. Yeah, coming full circle. I mean, that's the motivation here, right? That just doesn't happen.

It's too politically expensive to do that. Perfectly decentralized. Would you like to do a bonus round with me? Yeah, let's do it. Favorite phone wallet. Oh, boy. Is it too late to go back on this?

I actually don't have a phone wallet. Good for you. Favorite hardware wallet or signing device? Trezor. Your favorite way to buy and sell Bitcoin? I'm ashamed to answer this one. But I'm excited to learn from the community.

I am still buying my Bitcoin from Coinbase. It's a buy-on Coinbase and send to the Trezor. But I've been interested and intrigued in hardware and in mining because of the non-KYC Bitcoin you get.

And I'm just recently learning of some of these exchanges that offer. I don't even know if you tell me, John, are they called exchanges? But these solutions that offer non-KYC that you can just buy flat out.

Sure. First of all, I know Max has a whole litany of podcasts and privacy podcasts. And I know that he'd be happy to talk with you on how to whirlpool and coin-join those KYC sats that you got.

But one of our sponsors on the podcast is Peach Bitcoin. And that's a peer-to-peer exchange. I guess you can call it because what are you doing? You're exchanging sats for cash or giving cash for sats.

And Peach works like this. We're a miner as a pleb miner. You can go ahead and put a bid up on Peach where you want to sell-- let's say you want to sell 2 million sats. And you say, I want to sell 2 million sats for 1.5% over market price.

You fund the escrow in that account. They publish the offer. Somebody has that buy offer. They match those two things together. They pay you, whatever your method of payment. And they've released the escrow.

And it's as simple as that. Oh, that's genius. Maybe if you have an opportunity to give Peach Bitcoin a look, that's peachbitcoin.com. Awesome, I love it. I've heard about Peach Bitcoin. I've heard good things about it.

But I hadn't actually done my due diligence to actually see what differentiated them and what their solution was to non-KOC Bitcoin. I love it. We know them. They're good peeps. Good peeps at Peach.

They should make that part of their branding. Got the alliteration there. Yeah, thank you. P2P, Peach to Peach. Good peeps at Peach. There you go, Peter Piper picked a pack of pickled peppers.

Thank you, Zach, for being our pleb minor in the wild. Would you like to share your Twitter handle for everyone so they can follow along with the development of the North Sports? Yeah, sure.

It's pretty easy. Z-Bombs to Z at Z-B-O-M-S-T-A-Z. All right, I appreciate Zach. Thanks. Bill, thanks, Jim. Thanks again for listening. If you enjoyed that and you haven't already, I really would appreciate it if you would like, share with friends, or write a comment on any of the podcasting 2.0 apps.

Every subscription and review goes such a long way for helping people find this podcast. If you find it useful and you think others would as well, I really would appreciate it. Thanks again, and we'll catch you on the next one.